One of my good friends just returned from a long honeymoon in Hawaii. She had gotten married in early February and then immediately flown off to the islands for a week and a half of sun and honeymoon fun. You can bet that of all the things on her mind for that week and a half, filing her taxes was not one of them.
My friend’s unique situation—being just married with a child of her own already—got me thinking about the upcoming tax season and how she and her new husband would deal with their new tax situation. Because I’m nosy, I went ahead and did a little bit of research to come up with a handful of tips that could be useful to her and her husband, as well as to any other newly married couples out there getting ready to file their taxes. If you can think of other tips, please feel free to include them in the comments section!
Have a Financial Talk with Your New Spouse
This is perhaps the most important tax tip I could find. Across the board, webmasters of tax and financial sites unanimously advised that new couples should have a financial talk as soon as possible. Having this talk is important not only because it can help you figure out your new tax situation, but also because it will encourage you to establish financial goals and roles as a new couple. In my friend’s case, she and her husband could use this talk to figure out a financial plan for her daughter’s education and how that might affect the tax credits they take.
Reassess Your Withholding Status
During the tax discussion with your spouse, you should reassess both of your withholdings statuses on the W-4 form that you filled out when you both first took your jobs. You need to figure out as a couple if you should continue to withhold at the single rate, which is a legal option, or if you should change your status. Many factors will influence your decision here, which means there is no right answer for every couple. Generally, if you can afford to withhold throughout the year, then it will help reduce the taxes you have to pay come tax time; of course, you do not want to loan too much, as you’ll essentially be lending your money to the government interest-free. You’ll get a bigger tax return, certainly, but you’d be better off using that money for expenses throughout the year. You should consider meeting with a tax professional to help you find the perfect withholding balance.
Consider Filing a Joint Return
You should also meet with a tax professional to talk about the benefits and/or disadvantages of filing a joint tax return. As a couple, you have the option of filing a joint return or separate returns, but, as with most financial decisions, there are good and bad results of both that you will have to weigh against your financial situation and goals. For example, in the case of my friend, filing jointly would allow her to take educational credits on her taxes. Other couples might deal with unpaid student loans, for which jointly filing might allow them to deduct interest. Again, you will have to examine how filing jointly or separately can directly affect your specific financial situation before you can make a decision.
Fill Out a Name Change Form
If you have changed your name after getting married, then you should file a change of name form with the Social Security Administration as soon as possible. This is, of course, a common sense move, and most likely you will have already been advised to do this; however, it is very important regardless of how logical it may seem. Without your correct personal information, the Social Security Administration cannot credit your earnings to your payroll record, nor can they make sure you pay your Social Security and Medicare taxes as required. If the information is incorrect, it can create quite the headache around tax season, which is why it’s important to take care of as soon as possible.
About the Author:
This guest post is contributed by Raine Parker, who particularly enjoys writing about accounting degree. Questions and comments can be sent to: firstname.lastname@example.org.